Supreme Court upholds validity of Act 5 of 1950, contracts prohibited, no rights or damages claim

The Supreme Court held that Section 3 of Act 5 of 1950 was valid, and either the Prohibition Order of 1119 or the Prohibition Order of 1950 continued to remain in force. Consequently, the contracts entered into between the parties were prohibited, and no party could claim rights under these contracts. The claim for damages for breach of the contracts was not maintainable. The appeal was allowed, and the decree passed by the High Court was set aside, resulting in the dismissal of the suit.

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Issues Involved:
1. Validity of the contracts under the Travancore Cochin Vegetable Oils and Oilcakes (Forward Contract Prohibition) Order, 1950.
2. Continuation and validity of the Prohibition Orders of 1119 and 1950.
3. Compliance with Article 304(b) of the Constitution regarding the introduction and passing of Act 5 of 1950.

Issue-wise Detailed Analysis:

1. Validity of the Contracts under the Prohibition Order of 1950:
The appellant contended that the contracts in question were forward contracts and were void and unenforceable because they contravened the Travancore Cochin Vegetable Oils and Oilcakes (Forward Contract Prohibition) Order, 1950. The respondent argued that this Prohibition Order was void because the law under which it was passed was repealed, and its continuance by the repealing law did not save its validity. Both the trial court and the High Court accepted the respondent's plea, declaring the contracts valid and awarding damages for their breach.

2. Continuation and Validity of the Prohibition Orders of 1119 and 1950:
The Prohibition Order of 1119, issued under the Defence of India Act, was initially applicable in Cochin State. The Prohibition Order of 1950 was promulgated by the Travancore-Cochin Government under the powers conferred by the Cochin Essential Articles Control and Requisitioning Powers Act 8 of 1122 and the Temporary Emergency (Powers) Proclamation 5 of 1122. The High Court held that Section 3 of Act 5 of 1950 was void, which led to the conclusion that the Prohibition Orders ceased to be in force after 30th March 1950. However, the Supreme Court examined whether the Prohibition Orders were validly in force on 30th March 1950 and whether they continued under Section 73(2) of Act 5 of 1950.

3. Compliance with Article 304(b) of the Constitution:
The validity of Section 3 of Act 5 of 1950 was challenged based on Article 304(b) of the Constitution, which requires the previous sanction of the President for any Bill imposing restrictions on trade, commerce, or intercourse. The Bill for Act 5 of 1950 was introduced before the Constitution came into force, and the High Court held that the Bill, as modified and redrafted by the Select Committee, was introduced and moved in the Legislature without the President's sanction. The Supreme Court disagreed, stating that the Bill was validly introduced in December 1949, and no fresh introduction occurred after the Constitution came into force. The Bill remained pending in the Legislature, and no amendments requiring the President's sanction were moved after the Constitution's enforcement.

Conclusion:
The Supreme Court held that Section 3 of Act 5 of 1950 was valid, and either the Prohibition Order of 1119 or the Prohibition Order of 1950 continued to remain in force. Consequently, the contracts entered into between the appellant and the respondent were prohibited, and no party could claim rights under these contracts. The claim for damages for breach of the contracts was not maintainable. The appeal was allowed, and the decree passed by the High Court was set aside, resulting in the dismissal of the suit.

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